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Merck (MRK) to Acquire Private Neuroscience Company for $610M

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Merck (MRK - Free Report) announced a definitive agreement to acquire pre-clinical stage private biotech Caraway Therapeutics for a total potential consideration of up to $610 million.

Caraway Therapeutics makes medicines for genetically defined neurodegenerative and rare diseases through innovative mechanisms of action. The purchase consideration includes an undisclosed upfront payment as well as contingent milestone payments based on the development of some pipeline candidates.

Merck has been a shareholder in Caraway Therapeutics since 2018 through its MRL Ventures Fund. The board of directors of Caraway Therapeutics has already approved the deal.

Merck’s stock has declined 7.9% so far this year against an increase of 4.5% for the industry.

Zacks Investment Research
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Merck, in order to build its long-term portfolio, regularly enters into collaboration and licensing deals and M&A activities.

In 2023, it acquired Prometheus Biosciences, which added MK-7240 to its pipeline. MK-7240, a novel TL1A inhibitor, is being developed for the treatment of immune-mediated diseases, including ulcerative colitis, Crohn’s disease and other autoimmune conditions. In October 2023, Merck announced a $22 billion deal with Daiichi Sankyo to co-develop and co-commercialize the latter’s three DXd ADCs — patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan worldwide, except Japan, for the treatment of multiple solid tumors.

Zacks Rank and Stocks to Consider

Merck has a Zacks Rank #3 (Hold) currently.

Some better-ranked stocks in the drug/biotech sector are Novo Nordisk (NVO - Free Report) , Dynavax Technologies Corporation (DVAX - Free Report) andHarpoon Therapeutics (HARP - Free Report) . While Harpoon Therapeutics sports a Zacks Rank #1 (Strong Buy), Dynavax Technologies and Novo Nordisk carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Novo Nordisk’s 2023 earnings per share have increased from $2.57 to $2.62 over the past 30 days. Estimates for 2024 have jumped from $2.99 per share to $3.07 over the same timeframe. NVO’s stock has surged 51.7% year to date.

Earnings of Novo Nordisk beat estimates in two of last four quarters, missed in one and matched estimates in one, delivering an earnings surprise of 0.58% on average.

In the past 30 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 22 cents to 12 cents. During the same period, earnings per share estimates for 2024 have improved from 8 cents to 18 cents. Year to date, shares of DVAX have rallied 27.2%.

DVAX’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 293.21%.

In the past 30 days, estimates for Harpoon Therapeutics’ 2023 loss per share have narrowed from $4.30 to $2.09. During the same period, loss per share estimates for 2024 have improved from $2.75 to $1.26. Year to date, shares of HARP have rallied 81.2%.

Harpoon Therapeutics’ earnings beat estimates in three of the trailing four quarters and missed the mark in one, delivering an average surprise of 47.59%.

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